Safaricom IPO: Kenya’s Commercial Success Story

Published on 7th April 2008

Safaricom's CEO Micheal Joseph 
Safaricom’s recent posting of KShs17 billion profits has proved to be a sterling example of Kenya’s commercial success story that may clear doubts for those skeptical about investing in the Kenyan economy. The company’s strong identity and aggressive marketing campaign has confounded its rival mobile telephone provider in terms of subscriber numbers and subscription growth. The ongoing Safaricom IPO that President Kibaki managed to launch amidst public agitation requiring the Government to fully adhere to provisions of Privatisation Act 2005, is an addition to the company’s innovative business.

Kenyans from all walks of life, locally and in the diaspora, are now unified in buying ownership of a company whose service is consumed by 6 million of them on a daily basis.  Safaricom’s IPO of 10 billion shares representing 25 percent equity in the mobile service provider offered to the market is the largest ever floatation on an East African stock exchange. The shares are priced at KShs 5 and are likely to raise KShs 50 billion in gross proceeds from the sale.

However, the million dollar question is: who will pocket the cash?  The current shareholding in Safaricom Limited is Government of Kenya, 60 percent, Vodafone International, 35 per cent, and Mobitelea Limited, 5 percent.

Different stakeholders have raised questions about the shadowy shareholder - Mobitelea Ventures Limited. Could the Safaricom IPO be another scam for some well placed few to harvest mwananchi’s sweat? It is amazing how our public leaders are masters at economics of truth telling. Is it true that they do not know who the owners of Mobitelea are? No. They cannot reveal to the public because such information normally serves them privately in horse-trading for favours. Therefore, the little hullabaloo of press statements the public was recently entertained to is all the effort mwananchi will see from those self proclaimed “do gooders”.

Parliament’s 2007 Public Investment Committee report concerning Mobitelea’s shareholding reports that “there appears to have been a conspiracy of some Government officers to defraud the public…” The refusal of the Government to give full disclosure of how Mobitelea Ventures Limited became a shareholder in Safaricom is a definite tell tale. What the report does not reveal is the empirical formula used to arrive to such ominous conclusion. However, considering that this is a case of a thief investigating a thief, it is not hard to guess the veracity of the report. In addition, considering Kenya’s history of Government abated grand corruptions, the public’s suspicion that the IPO besides affording Kenyans ownership of Safaricom, it is highway for owners of Mobitelea to dispose of their questionable shareholding or an opportunity to launder proceeds of corruption could not be far from the truth.

Our August house which is supposed to the wananchi’s watchdog has been very silent and the media (who have never learnt the art of investigative journalism) are so much caught up with the power sharing intrigues, hence, Kenyans will invest or not invest on misinformation. 

It should not escape us that Safaricom is a public company that was acquired by Telkom Kenya through taxpayers’ money. Further, it is Kenyans who have built this company into irrefutably the most profitable company in the region through hard earned cash from “jua kali”, “mjengo” and “quarry” works. Therefore, the floatation of the Safaricom shares is grand opportunity for the same “mama mbogas” to own a piece of the company.

However, I hope this huge interest in the region’s most profitable company will not turn out to be an additional disappointment to investors like Firestone East Africa in 1995 when the public lost 49 per cent held under ICDC to Sameer Investment Company.

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